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① The second quarter may reach its peak, and the US economy may cool down in the second half of the year

In the second quarter of 2024, the real gross domestic product (GDP) of the United States increased by 2.8% year-on-year, higher than the expected 2.0%, and a significant rebound from the 1.4% in the first quarter, showing that the US economy showed a strong recovery momentum in the second quarter. However, consumption data and employment data are not optimistic. Durable goods orders unexpectedly fell sharply in June, with overall orders falling 6.6% month-on-month, far worse than the expected growth of 0.3%. The decline after four consecutive months of increases was mainly due to the decline in automobile consumption. And the decline in automobile consumption means that there are big problems with savings in the whole society. At the same time, although the number of first-time applications for benefits in the United States in the week of July 20 was 235,000, lower than the expected 238,000, the four-week average number of continued unemployment benefits rose to 1.8535 million, the highest level since December 2021. In recent months, this data has continued to rise, and some analysts say this shows that some Americans receiving unemployment benefits find it more challenging to find jobs.

CFA Zhou Chunzhe:The main reason for the strong quarter-on-quarter growth in U.S. GDP in the second quarter came from consumer spending. However, if the job market continues to cool and wage growth slows, coupled with recent fluctuations in financial markets, it may have a certain impact on U.S. consumer spending in the second half of the year, dragging down consumer spending across the board. It is expected that U.S. economic growth will cool in the second half of the year, rather than further strengthening in the second quarter.

Guo Feng, Chief Investment Advisor of Northeast Securities:China's economy improved on a month-on-month basis and continued to recover. Positive policies are expected to bring momentum for recovery in the second half of the year.

② McDonald's net profit in the second quarter decreased by 12% year-on-year. Low-price promotions were well received by the capital market.

McDonald's revenue in the second quarter of 2024 was $6.49 billion, slightly lower than $6.498 billion in the same period last year; operating profit was $2.92 billion, a year-on-year decrease of 6%; net profit was $2.022 billion, a year-on-year decrease of 12.47%; adjusted earnings per share was $2.97, lower than the expected $3.07. The group's global same-store sales fell 1%, while the market expected an increase of 0.84%; among them, same-store sales in the United States fell 0.7%. In the first half of 2024, McDonald's revenue was $12.659 billion, a year-on-year increase of 2%; operating profit was $5.655 billion, slightly lower than $5.637 billion in the same period last year; net profit was $3.951 billion, a year-on-year decrease of 4%. McDonald's also said on Monday that according to the current situation, it will reduce the price increase this year. Faced with market headwinds, McDonald's fully launched the "$5 value meal" in the US market at the end of June, which includes a hamburger, McNuggets, small fries and a small Coke, which is about 30% to 40% off the original price of local single products. The promotion was originally planned to last only one month, but due to the good market response, the company decided to continue it in August. Due to the time when the promotion was launched, the marketing gain was basically not reflected in this financial report. However, it is precisely because of the timely transformation to the "cost-effective" front that McDonald's stock price rose instead of falling after announcing a financial report that was weaker than market expectations, with an overnight increase of 3.76%.

CFA Zhou Chunzhe:As the leader of fast food in the United States, McDonald's saw its second-quarter sales fall for the first time since 2020, indicating that demand from low-income consumers is declining. McDonald's suddenly launched a $5 value meal about a month ago because consumers are becoming increasingly sensitive to prices and are looking for affordable meals under the shadow of high interest rates and high inflation. The $5 value meal was launched on June 25 and was originally planned to last for about a month. As consumers become more sensitive to prices, McDonald's decided to extend the discount period for its $5 value meal, a strategy that successfully attracted customers back to its stores. Recently, there are signs that U.S. consumption has begun to slow. The U.S. consumer confidence index fell to an eight-month low in July, and restaurant stocks fell. The possibility of a U.S. recession cannot be ruled out.

Guo Feng, Chief Investment Advisor of Northeast Securities:Currently, the consumption sector of A-shares is in a stage of adjustment. Residents’ willingness to consume in the second quarter is insufficient, and more policies to stimulate consumption are needed.

③ The duopoly of weight loss drugs may be broken. Viking Therapeutics and Roche's weight loss drugs may be launched ahead of schedule

Viking Therapeutics has accelerated the development of its candidate weight loss drug VK2735. After receiving a written response from the U.S. Food and Drug Administration (FDA), it decided to advance it to the third and final phase of clinical trials; its oral version will start mid-term trials in the fourth quarter. Justin Zelin, an analyst at BTIG, pointed out that the decision to advance to the third phase of clinical trials may shorten the development time of Viking Therapeutics' weight loss drug by one year, while the market generally estimated that the drug would be launched in 2029. Driven by this news and financial performance, Viking Therapeutics' stock price rose nearly 31% in the last two trading days of last week. Coincidentally, Roche also plans to accelerate the development of its anti-obesity drugs. The company's CEO Thomas Schinecker recently pointed out that Roche's first batch of weight loss drugs may be launched in 2028 earlier than market expectations. Goldman Sachs analysts expect that by 2030, the market size of weight loss drugs will exceed US$130 billion; Morgan Stanley and other analysts expect that by 2030, the global market size of GLP-1 treatment drugs may reach US$150 billion. In addition to Novo Nordisk's Wegovy and Eli Lilly's Mounjaro, other pharmaceutical companies including Boehringer Ingelheim, Pfizer and Amgen also hope to launch related drugs.

CFA Zhou Chunzhe: According to the experimental results, the average weight loss of patients receiving Viking Therapeutics' VK2735 was greater than that of Novo Nordisk's Wegovy and Eli Lilly's Zepbound when injected with the same dose. At the same time, Viking Therapeutics is also testing the effect of the drug once a month, which is more attractive than the current weekly injection of the "weight loss duo". Whether Viking Therapeutics' stock price can reach a new high will depend on whether VK2735 can be successfully launched and the clinical performance of oral drugs. Roche's weight loss treatment program was acquired by the acquisition of biotechnology company Carmot Therapeutics for up to $3.1 billion last year, including a weight loss injection that is about to enter Phase II trials, and a pill that reduces weight by 6.1% compared with a placebo after taking it for four weeks. Both Viking Therapeutics and Roche's weight loss drugs are likely to be launched ahead of schedule, intensifying competition in the weight loss drug market, and putting pressure on the stock prices of the two pharmaceutical giants Eli Lilly and Novo Nordisk. Eli Lilly and Novo Nordisk dominate the weight loss drug market with their injectable GLP-1 drugs, tesiparatide and semaglutide, but the stock prices of both companies have fallen recently due to the release of positive trial data of their drugs by competitors. Since July, Roche ADR has risen by more than 17%.

Guo Feng, Chief Investment Advisor of Northeast Securities:The current valuation of the A-share innovative drug sector is at a historical low and has certain configuration value.

④ Philips' net profit in the second quarter increased fivefold, and strong demand drove the order volume to surge by 9%.

The second-quarter results released by Dutch consumer electronics giant Philips before the market last night showed the stability of its financial situation and its growth potential. Although revenue fell slightly from 4.47 billion euros in the same period last year to 4.462 billion euros, comparable sales increased by 2%, and comparable orders increased by 9%. Behind this achievement, the surge in net profit is particularly eye-catching, from 74 million euros last year to 452 million euros, a year-on-year surge of 5.1 times; earnings per share were 0.48 euros, higher than 0.07 euros in the same period last year. It is particularly worth mentioning that Philips' adjusted earnings before interest, taxes, depreciation and amortization reached 495 million euros, far exceeding the market expectation of 426 million euros. Philips' expectations for fiscal 2024 remain optimistic, with comparable sales expected to increase by 3%-5%, adjusted EBITA margins to reach 11%-11.5%, and free cash flow to increase to 900 million-1.1 billion euros. Although acknowledging certain uncertainties, the company is confident in achieving its 2025 plan.

CFA Zhou Chunzhe:Philips' net profit in the second quarter surged fivefold. On the one hand, it was due to the substantial cost reduction. Under the leadership of the new CEO, the company streamlined and 9,000 of the planned 10,000 job cuts were achieved ahead of schedule. On the other hand, order revenue increased by 9% over the same period last year, with strong performance in North America. With the company's gradual recovery and adjustment in the global market and its continued focus on product quality and safety, Philips is expected to achieve more stable growth in the future.

Guo Feng, Chief Investment Advisor of Northeast Securities:You can pay attention to the investment opportunities brought by the implementation of AI applications to boost the demand for replacement of consumer electronics.

⑤ The low-altitude economy is rising and air taxis are no longer a dream

At this year's Farnborough International Air Show in the UK, electric take-off and landing aircraft (eVTOL) manufacturers, including Germany's Lilium, Spain's Crisalion, the UK's Vertical Aerospace; Boeing's Wisk Aero and Joby all exhibited their full-scale prototypes; Embraer showed its Eve prototype. At present, most eVTOLs are propeller-driven, can take off and land like helicopters, and fly like airplanes. Because they are battery-driven, they are zero-emission, but the range and flight time will be limited. For manufacturers, safety certification is currently the most important step. A week before the air show, Lilium is getting its biggest deal to date. Saudi Arabian Airlines has agreed to buy up to 100 air taxis from it. Crisalion of Spain also received an order for 10 eVTOLs from Dubai helicopter service operator Air Chateau last Thursday, which will support the development of the UAE's air taxi service. Analysis points out that one day in the future, passengers will be able to take this aircraft at a price similar to that of Uber.

CFA Zhou Chunzhe:The latest trends in the global aviation industry can be seen at this air show: green aviation technology is leading the industry, and the low-altitude economy has accelerated. Whether eVTOL can be commercialized on a large scale depends on two key factors: safety and cost. For manufacturers, safety certification is the most important step. For consumers, whether the price is within their affordable range is an important consideration.

Guo Feng, Chief Investment Advisor of Northeast Securities:The hot spots of A-share technology stocks revolve around new quality productivity, and AI, low-altitude economy, intelligent driving, etc. are all worth paying attention to.

Zheshang Securities National Defense Equipment Industry Weekly Report (4th Week of July):Emphasis is placed on emerging strategic industries such as low-altitude economy and commercial aerospace. Low-altitude economy: Zhongzhi Shares, Weihai Guangtai, Zhong UAV, Aerospace Rainbow, Tiancheng Automation. Recommended stocks to watch include Zongheng Shares, Guorui Technology, Rice Information, Sichuan Jiuzhou, SiChuang Electronics, CITIC Haizhi, Zhongke Xingtu, and Andaville.